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Posted July 29, 2009 by publisher in Business In Cuba

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By Marc Frank | Reuters

Cash-strapped Cuba should consider putting more of its state-run economy in the hands of producers, as President Raul Castro has done with agriculture, the country’s top economic commentator said on Tuesday.

Ariel Terrero, during his regular Tuesday appearance on state-run television, did not call for private management, but suggested that sectors such as food services and retail could perform better if they were run in a new way.

“In the Cuban economy, there’s a need to look for formulas more dynamic, more intelligent, of understanding property, of running a business, of running a cafeteria,” he said.

About 90 percent of communist-led Cuba’s economy is under state control.

Terrero pointed to Castro-led reforms in the island’s agriculture that include decentralization of decision-making, greater emphasis on private cooperatives and farms, and the leasing of state lands to some 80,000 individuals.

“The leasing of state lands, which in the end is the placing of state property in the hands of producers, could be applied in other sectors, for example food services, retail trade, and other areas where really it is impossible, given the diversity and breadth, for the state to administer directly,” he said.

Terrero, who regularly comments on economic affairs in Cuba’s tightly controlled state media, said big, concentrated operations such as nickel plants, sugar mills, hotels and the power grid were not the same as an appliance repair shop or a cafeteria.

“I think this diversity requires new thinking about the concepts and manner of understanding property in the Cuban economy,” he said.

Raul Castro replaced ailing brother Fidel last year and since then has pushed for a more efficient and streamlined government and economy.

He replaced his economic Cabinet in March amid the worst financial crisis Cuba has gone through since the demise of former benefactor the Soviet Union in 1991.

Terrero said the current difficulties could open the way to reform, pointing out that in the 1990s crisis the economy was opened up to foreign investment, tourism and some small family businesses.

His comments follow a recent government report seen by Reuters that suggested similar changes.

The report by the Economy and Planning Ministry blamed hurricanes, the US embargo and world financial crisis for a cash shortage that has forced cutbacks in imports, budgets and energy consumption.

But it also said long-standing structural problems were to blame.

“State-run socialist companies must be efficient and for that what they need for their optimal performance must be guaranteed,” the report said.

“The remainder of the economy must adapt to a form of property better suited to the resources available,” it said.

Many Cuban economists have long argued that the state should focus on large companies and wholesale trade and get out of the retail business, which it has monopolized since 1967 and which the government admits is plagued by petty theft, inefficiency and abysmal service.

Cuba expert Daniel Erikson at the Inter-American Dialogue think tank in Washington said it appears the Cuban government may be considering such a move.

“What this tells me is that the Cuban government is once again wrestling with the central dilemma of how to adapt the island’s outdated economic model to changing realities,” he said.

“At bottom this is a debate about reducing the role of the state and allowing controversial free market practices to take root,” he said.

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  1. Follow up post #1 added on July 29, 2009 by publisher with 3905 total posts

    Well, let’s see what Fidel has to say (or not say) about this.

    Will he crush this idea and make Raul look foolish again or will he remain silent?

    After all no one from outside of Cuba has seen Fidel alive since June 11 even though he is supposedly writing his Reflections (that no one cares about).



    Cuba consulting services

  2. Follow up post #2 added on August 01, 2009 by rogdix

    Reading Terrero’s analysis of the Cuban economic fiasco, - just how naive can you get. Retail shops are not the same as nickel plants. Really?


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